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The ProShares Smart Materials ETF Looks to Invest in $110 Billion Market

ProShares launched its latest ETFs on Oct. 26. One of the three new entrants is the ProShares Smart Materials ETF (NYSEAMERICAN:TINT). It’s a collection of companies that should benefit from a push into smart materials. 

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Source: Gorodenkoff / Shutterstock

“We are excited to launch a set of truly innovative funds that give investors access to themes previously not available in the areas of nanotechnology, smart materials, and on-demand platforms,” said ProShares CEO Michael L. Sapir. 

So, what are smart materials? They’re found in everyday life. 

Whether it’s temperature-sensitive coatings for windows to shape memory alloys for aircraft wings, they push the envelope to deliver better products for consumers and businesses. 

Let’s take a look at TINT and see what it has to offer.

The Smart Materials Market and TINT ETF

As mentioned in the headline, the smart materials market is big and getting bigger. Globally, it was a $44 billion market in 2019. By 2026, it’s expected to reach $110 billion. 

A concrete example of how smart materials are used in today’s world is energy-saving smart windows. Both Netflix (NASDAQ:NFLX) and Facebook (NASDAQ:FB) use them at their head offices to block more than 90% of solar radiation while storing sunlight. Multiply these windows across millions of homes and businesses and the energy savings becomes significant. 

Another real-world example of how smart materials can make a difference is thermochromic coating technology. PPG Industries (NYSE:PPG) and the National Hockey League use the technology for hockey pucks. Referees can tell when a puck has gotten too warm and needs to be replaced by a nice cold one. 

As a Canadian, you would think I’d have known that fact. 

The Key Details

As with any ETF, there are a few things that are important to know. Here are the key points about TINT.

First, it is a passively managed fund. Second, it tracks the performance of the Solactive Smart Materials Index. The 30 companies in the index are selected based on their level of exposure to smart materials. Those with the highest exposure are ranked higher. 

Once selected, the 30 are weighted based on market capitalization. No single stock can have a weighting of more than 4.5%. Both U.S. and non-U.S. companies are eligible for inclusion. The portfolio is rebalanced and reconstituted twice a year. 

Lastly, most investors like to know what it costs to invest. TINT has a management expense ratio of 0.58%. A $10,000 investment in TINT over three years will cost you $174 in total fees. It might not be as low as an S&P 500 ETF, but it is a reasonable fee compared to other thematic ETFs    

Some of the Players

As of Nov. 10, TINT’s top 10 holdings accounted for around 48% of its $4 million in total assets. The top three companies held by TINT by weighting are Hansol Chemical (KRX:014680) at 5.54%, Sherwin-Williams (NYSE:SHW) at 5.02%, and 5.01% for Sika AG (OTCMKTS:SXYAY).

Of the three, I am most familiar with Sherwin-Williams. I recently selected the paint and architectural coatings business as one of 10 stocks to own for the next 15 years. It’s performed for its shareholders in the past, generating a 15-year annualized total return of 20.7% through Oct. 25. 

While not in the top 10, PPG Industries, mentioned earlier, is one of the 30 holdings with a weighting of 4%. 

View (NASDAQ:VIEW), whose smart windows were discussed in the previous section, is a holding of the ETF with a weighting of 2.53%. It became a public company in March after merging with a special purpose acquisition company (SPAC). 

The company has taken 12 years to get to this point. To date, View’s smart windows are in 75 million square feet of offices, hospitals, hotels, and many other types of real estate. 

The U.S. accounts for 51.85% of the fund, followed by South Korea (17.26%) and France (11.57%) in the top three country allocations. 

As for the size of the company held by TINT, large-cap stocks account for 72% of the fund, mid-caps account for 18%, and small and micro-caps account for the remaining 10%.    

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. 


Article printed from InvestorPlace Media, https://investorplace.com/2021/11/the-proshares-smart-materials-etf-looks-to-invest-in-110-billion-market/.

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